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Calculate the amount that must be capitalize

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ABC purchases a vehicle, fair value Rs 250,000 on a finance lease from Rainy. At the end of the 5 year lease, the asset is expected to have a residual value of Rs 40,000. The annual lease payments amount to Rs 50,000 and the first lease payment is effected is initially made on the delivery of the asset. The applicable discount rate is 10%.

Problem 1: In line with IAS 17, calculate:

a. the amount that must be capitalize at in the financial statements.

b. the depreciable amount on the asset.

Reference no: EM132962950

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